Iowa Farm Bureau says no to direct payments

The Iowa Farm Bureau says it favors eliminating direct payments to farmers, especially if the money saved can be used to improve the appeal of the Average Crop Revenue Election or ACRE program.

The Iowa Farm Bureau action, which is not binding on any other state Farm Bureau, may be the first by producers to call for an end to direct payments, which have become a favorite target of criticism by non-farm groups.

Direct payments originated in the 1996 farm bill when Sen. Richard Lugar, R-Ind., and then-Rep. Pat Roberts, R-Kan., proposed replacing conventional farm payments with a pool of money that would be divided up between growers with acreage bases. They were viewed as a way transition the government out of farm programs.

As most readers know, farm prices plummeted and Congress passed emergency legislation to help farmers get through the crisis until it could fix the problem.

During the debate at their fall policy meeting in Des Moines, Iowa Farm Bureau leaders said their proposal would be controversial, especially in the South where they believe support for direct payments remains strong.

Well, it does and it doesn’t. Southerners rely on fixed payments to help cash flow when they’re seeking operating loans. Most would just as soon the $5 billion annual price tag for direct payments that shows up in the media whenever farm programs come under attack would go away.

For years, farmers throughout the country received target price or deficiency payments when market prices for their crops were low. When prices were high, the payments went away.

Those were phased out in 1996, in part, because it made budgeting for farm programs difficult. But their demise also made farmers vulnerable to the vagaries of low prices, particularly when Asian currencies imploded as they did in 1997 and 1998.

Congress tried to fix the problem with target price payments in the 2002 farm bill. But those didn’t work for Midwest growers when they were caught short by a drought or freeze. That led to another attempted fix with the revenue assurance or ACRE program in the 2008 farm law.

That fix failed to register with many because it was based on state yield averages rather than a more expensive county-based program and required them to accept lower direct and target price payments.

House Agriculture Committee Chairman Collin Peterson is believed to favor shifting direct payment funds into a revamped ACRE program. At a hearing in Des Moines last spring, he said many upper Midwest growers fared well with ACRE in 2009.

He also said new farm programs will be offered for the 2012 farm bill that will negate the need for payment limits language.